Monday, April 19, 2010

Township Taxation - models and options


There is no wonder I hear the same story everywhere I go.  “Please lower my taxes.“  I remember the unmarried teacher who told me about her struggle to raise her two children on her salary. She has no means to continue to pay her taxes that continue to spiral upward.  I remember the story of the 59-year-old gentleman who seeks a job, any job, but cannot find employment here.  There are many such accounts waiting to be heard. Saying that we will reduce taxes is easy; doing it is not. We must meet our obligations and protect our core values.
Last week, some homeowners received their 2009 property assessments. I am told that because investment companies and individuals are buying houses as rental property, big bucks are being spent to upgrade them to sell to rental agencies, and as a result, home values rose in the area by 15% this last year, by 10% four years ago. The total obviously adds up to 25% in just four years.  Personally, I have made no upgrades, but get assessed as if I did anyway. I could no more sell my house for what the county assessor says than a man in the moon. I have often thought that to make the system fair and the government accountable, we should have a guarantee by the government to buy the home for the value they say it is worth. I have a feeling that if we did that, the process would be a bit fairer, don’t you?  Valuation of homes is claimed to have remained flat here in The Woodlands during the last year according to a local real estate analysis, revealing a 2% decrease in the value of high cost homes and about 2% increase in the value of other homes. Higher assessments make good news to our government. Government income continues to fund projects. Controlling the budget is the only way to reduce taxes. By law, the government must levy sufficient taxes to meet the budget.
Case after case, we see residents suffering from taxation based on home market value. One buyer said he bought a home across the street, because one day his family might move here.  He lives in California. Many of us actually live in our Woodlands houses. We should not be taxed so much as to force us to leave the community. Renters and leasers do not normally contribute to the welfare of our community; it is likely that the residents in those homes take little real interest in the community, and they sometimes add extra burden to our community services, especially if they do not maintain their yard or bring in added behavioral or covenant issues.
What should we do?
1.    Lower the tax rate. The prior TCID proposed a rate of 29.7 cents on $100 evaluation in preparing us to vote on the three propositions to form our government and to tax homeowners. We are currently taxed at $32.8 cents. It is highly unlikely that we will get the rate reduced by more than one cent. That does not result in much savings on the lower cost homes.
2.    Give homeowners a homestead exemption break. Sugarland, for example, has either a five or a seven cent homestead reduction from their $0.30 city tax rate.  Therefore, homes to rent or lease or for vacation homes are taxed at $0.30 but those living in their homes pay much less. In real estate, Sugarland is a significant competitor to The Woodlands.
3.    Limit the impact of higher assessments.  There is a state law that limits the rise to 10% from year to year. That law is archaic. In a low inflationary period such as today, the limit must be set at the economic index or some other relevant suitable index. With residents achieving a 1% pay raise rise or even decreased pay, why should the local governments continue to spend money like we are in a terrific economic environment? The entire middle class of America seems to be either on fixed income or worse.  To enable this strategy, I am told we will have to seek legislation.
4.    Give the 65+ community a homestead break. They have been paying their share for years and now are pulling their savings down to pay taxes and volunteering their time to boot.       
 Will we take action on these options? If I have any say on the matter, we will!

1 comment:

Scott said...

Please lower my taxes AND lower my government entitlements! Spending by the Township seems to be very irresponsible, from the Township General Manager's extremely high salary/benefits to the now infamous waterway taxis. Don't worry, the residents will take care of it!